McCarthy, GOP debt limit plan proposes $4.5 trillion in cuts, eliminates student loan forgiveness

WASHINGTON – House Speaker Kevin McCarthy unveiled a Republican debt ceiling plan Wednesday that includes $4.5 trillion in cuts, drawing immediate resistance from President Joe Biden as their standoff intensified before a potential government default this summer.

The "Limit, Save, Grow Act" would return discretionary spending to fiscal year 2022 levels, limit spending growth to 1% a year, reallocate unspent COVID-19 relief money and limit other government spending, the Republican speaker said. The cuts would be tied to a $1.5 trillion increase of the debt ceiling.

"President Biden has a choice," McCarthy said in a speech from the House floor Wednesday. "Come to the table and stop playing partisan political games, or cover his ears, refuse to negotiate and risk bumbling his way into the first default in our nation's history."

More: Speaker McCarthy and House GOP race to unveil and unite behind debt ceiling proposal

Biden: McCarthy plan would hurt 'hard-working' people the most

The debt ceiling is the maximum amount the U.S. government can spend on its existing obligations, including Social Security and military salaries. Treasury Secretary Janet Yellen notified Congress at the start of this year that the U.S. could default on its debt as soon as June.

President Joe Biden responded to McCarthy by reaffirming that he wouldn't negotiate the debt ceiling, which he has argued should be raised by Congress without parameters, as it has been under past presidents, including Donald Trump.

"Guess what? He's attempting to try to make it happen now," Biden said in remarks at a union hall in Accokeek, Maryland, minutes after McCarthy unveiled his plan. "Massive cuts to programs you count on. Massive benefits protected for those at the top."

Biden said a government default, if the debt ceiling isn't raised, would "destroy this economy. And who do you think it will hurt the most? You. Hardworking people."

McCarthy's proposed cuts

McCarthy said the legislation would rescind funding for 87,000 IRS agents outlined in Biden's Inflation Reduction Act, end tax incentives for companies that invest in green energy, and eliminate Biden's student loan forgiveness plan.

Other proposed cuts include raising the age limit on work requirements to receive federal food aid from the Supplemental Nutrition Assistance Program, or SNAP, from 50 to 56. The bill also would prevent the Biden administration from limiting consumer access to gas stoves or ovens – a new rallying cry for Republicans.

More: Amid debt ceiling standoff, why Joe Biden is refusing to negotiate with Republicans

Why McCarthy released a debt ceiling plan now

For weeks, the White House has dared Republicans to release their spending plan after Biden proposed a $6.9 trillion budget in March that includes billion in new taxes targeting the wealthy and corporations to grow the government's social safety net.

"Now that we've introduced a clear plan for a responsible debt limit increase, they have no more excuse and refuse to negotiate," McCarthy said. "The president is ignoring the debt crisis."

It's unclear whether McCarthy's bill has the votes to pass the Republican-controlled House, and it has virtually no chance of approval in the Democrat-controlled-Senate. But McCarthy's ultimate goal isn't passage but to force Biden to start entertaining spending cuts.

Biden slammed McCarthy's plan as a "MAGA economic agenda" that cuts taxes for the rich and benefits for the middle class.

"It's not about fiscal discipline," Biden said. "It's about cutting benefits for folks that they don't seem to care much about. It's about finding ways to squeeze out more of America's middle class."

If the federal government defaults on its payments, Americans could see consequences like a stock market crash, a recession and a rise in unemployment, experts have told USA TODAY.

Yet neither side, for now, is blinking.

More: Biden says McCarthy risking default on national debt: 'What are MAGA Republicans doing in Congress?'

Reach Joey Garrison on Twitter @joeygarrison.

This article originally appeared on USA TODAY: McCarthy, GOP debt limit plan proposes $4.5 trillion in cuts